FAF wants U.S. represented in IASB standards advisory group

The Financial Accounting Foundation trustees are advocating for broad
membership, including a possible U.S. role, in a forum of national and
regional standard setters that is being formed to advise the
International Accounting Standards Board.

In a
letter dated Dec. 27, Financial Accounting Foundation (FAF)
Chairman Jeffrey Diermeier encouraged the IFRS Foundation not to make
a written commitment to IFRS a prerequisite for participation in the
Accounting Standards Advisory Forum (ASAF), which will provide
technical advice and feedback to the International Accounting
Standards Board (IASB).

“Requiring a written commitment … would exclude many jurisdictions
from membership, including those where the standard setter does not
have the final authority to adopt or endorse IFRS; those where IFRS
has been adopted but has been modified; and those—including the United
States—where no decision has been made regarding adoption or
endorsement of IFRS,” Diermeier wrote.

The SEC staff released in July a report
on the effects IFRS incorporation would have in the United States, but
did not make a recommendation. The SEC’s continued consideration of
IFRS for U.S. public companies has been a source of frustration for
IASB Chairman Hans Hoogervorst, who repeatedly has urged the United
States to adopt IFRS.

The matter now rests in the hands of the SEC commissioners, who have
given no indication of a timetable for considering the question.

In an Invitation
to Comment on its proposal to establish the ASAF, the IFRS
Foundation said it would like forum participants to commit to making
their best efforts to promote the endorsement or adoption of IFRS in
full and without modification over time.

The FAF trustees appear unwilling to make such a commitment. In his
letter, Diermeier said that the FAF trustees believe that a more
practical goal for the foreseeable future is to achieve highly
comparable—but not necessarily identical—financial reporting standards
that are based on a common set of international standards.

“We would encourage changes to the commitment [requirement] that
would allow for the broadest possible participation in the ASAF
process,” Diermeier said.

Despite the wording of the Invitation to Comment, Hoogervorst said
in a speech
earlier this month at the AICPA Conference on Current SEC and PCAOB
Developments that he would like and expect FASB to become a fully
engaged partner in the global forum.

But Hoogervorst also called for a tangible sign of U.S. commitment
to a single set of global standards, which Diermeier said is a worthy
objective, but not as practical for the immediate future as standards
that are “highly comparable.”

Hoogervorst also warned that there is “much concern” about continued
U.S. leadership in the work of the IASB if the United States does not
commit to global standards.

Diermeier’s letter said that for the ASAF to achieve its objectives,
its membership should include jurisdictions representing the world’s
major capital markets.

The IFRS Foundation’s Invitation to Comment proposes that the ASAF
consist of 12 members—three each from the Americas, Asia-Oceania and
Europe, two from the world at-large, and one from Africa. The proposal
says the group must be compact to allow for effective debate, but
large enough for appropriate global representation.

The FAF letter supports the idea of the forum and says it could
become a useful vehicle for sharing potential agenda items, research,
proposals, and findings among national standard setters. Diermeier
also suggested that a “critical mass” of IASB members participate in
ASAF meetings to ensure effective technical discussion.

“The IFRS Foundation’s proposal … would establish a new mechanism in
which the FASB and other major market standard setters could share
technical perspectives with the IASB,” Diermeier said. “This has the
potential to create a much higher level of cooperation among standard
setters, leading to global standards that are more comparable and convergent.”

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